On July 11, 2000, the Commission
approved the General Counsels recommendation to take no further action and close the
files with respect to all respondents in the above-captioned matters.At issue was whether the American Federation of
Labor and Congress of Industrial Organizations (AFL-CIO) or its affiliates had
coordinated certain election-related public communications during the 1996
election cycle with federal candidate or political party committees and thus had made
in-kind contributions to those committees.Under the Federal Election Campaign Act (the Act), corporations and
labor organizations may not make contributions (including coordinated in-kind
contributions) in connection with federal election campaigns.2 U.S.C. § 441b.Based upon the standard for coordination created by the district court in Federal Election Commission v.Christian Coalition, 52 F.Supp.2d 45 (D.D.C. 1999),
the Office of General Counsel found insufficient evidence that respondents improperly
coordinated its activities with a federal candidate or party committee.

In my view, the Commission should not
have applied a 1999 district court ruling in deciding whether 1995/1996 activity
constituted impermissibly coordinated activity.Rather, the Commission should have looked to the regulations currently on the books
which define coordination.Indeed,
as a matter of administrative law, the Commission has an obligation to apply those
regulations.This is particularly true where,
as here, those regulations address Supreme Court and congressional concern.By contrast, the Christian Coalition ruling is nowhere reflected in
the Commissions current regulations and so narrowly defines coordination that it
threatens to undermine the Acts limitations and prohibitions.

With two Commissioners recused and at
least two other Commissioners supportive of the ChristianCoalition approach, however, I could imagine no
circumstances under which these matters could proceed by applying the Commissions
current regulations.With only four
Commissioners participating, my vote to oppose closing these matters would have only kept
these matters permanently unresolved.Accordingly,
I voted to support the General Counsels recommendations to take no further action
regarding these matters and to close the file.I
would have preferred that this matter be considered under the Commissions current
regulations after probable cause briefing.Even
if violations were found in these matters (and there is no way to predict, absent probable
cause briefing, what result might obtain) and a minimal civil penalty agreed to, an
outcome reached by applying the Commissions current coordination regulations is far
more preferable than embracing the ChristianCoalition definition of coordination.

I.

The definition of
coordination found in ChristianCoalition directly undercuts the effectiveness of
the Federal Election Campaign Act (the Act).In Buckley v.Valeo, 424 U.S. 1 (1976),
the Supreme Court upheld limits on contributions to federal candidates but ruled that a
similar limitation on independent expenditures was unconstitutional.The Court recognized, however, that its ruling
created many opportunities for evasion of the contribution limitations.If a would-be spender was able to pay for a
television advertisement provided by a candidate, for example, this
coordination would convert what is supposed to be an independent
expenditure into nothing more than a disguised contribution.Indeed, the Buckley Court warned that the contribution
limitations would become meaningless if they could be evaded by the simple expedient
of paying directly for media advertisements or for other portions of the candidates
campaign activities. Id. at 46.

In order to prevent attempts to circumvent the Act through
prearranged or coordinated expenditures
amounting to disguised contributions, id.
at 47 (emphasis added) the Buckley Court treated
coordinated expenditures. . . as contributions rather than expenditures.Id. at 46-47 (emphasis added).Thus, the Buckley
Court drew a specific distinction between expenditures made totally independently of the candidate and his
campaign and coordinated expenditures which could be constitutionally
regulated.The Court defined
contribution to include not only contributions made directly or
indirectly to a candidate, political party, or campaign committee . . . but also all expenditures placed in cooperation with or with
the consent of a candidate, his agents, or an authorized committee of the candidate.Id. at 78 (emphasis added).Reacting to these judicial concerns, Congress
enacted as part of the Federal Election Campaign Act Amendments of 1976 a definition of
independent expenditure now codified at 2 U.S.C. §431(17).Concerned that independent expenditures
could be used to circumvent the contribution limitations,[2] Congress preserved the
distinction drawn by the Supreme Court between those expenditures which were totally
independent of the candidates campaign and those which were not.[3]

The current language of the Act
reflects the judicial and legislative concern that independent expenditures are not turned
into disguised contributions through coordination with the candidate or his campaign.The Act squarely states that an expenditure made
in cooperation, consultation, or concert, with, or at the request or suggestion of,
a candidate, his authorized political committees, or their agents, shall be considered to
be a contribution to such candidate and subject to the contribution limitations.2 U.S.C. §441a(a)(7)(B)(i).Moreover, section 431(17) of the statute defines
independent expenditure as:

[A]n
expenditure by a person expressly advocating the election or

defeat of a clearly identified
candidate which is made without cooperation or
consultation with any candidate, or any authorized committee or agent of such
candidate, and which is not made in concert with, or
at the request or suggestion of, any candidate, or any authorized committee or agent
of such candidate.

2 U.S.C.
§431(17)(emphasis added).

Section 109.1(b)(4)(i) of the
Commissions regulations clarif[ies] this language[4]
and explains that an expenditure will not be considered independent if there is
[a]ny arrangement, coordination, or direction by the candidate or his. . . agent
prior to the publication, distribution, display or broadcast of the communication.
11 C.F.R. §109.1(b)(4)(i).The regulations
further state that an expenditure is presumed not to be independent if:

(A)Based on information about the candidates plans, projects, or needs

provided to the expending person by
the candidate, or by the candidates agents, with a view toward having an expenditure
made; or

(B) Made by or through any person who
is, or has been, authorized to raise

or expend funds, who is, or has been,
an officer of an authorized committee,

or who is, or has been, receiving any
form of compensation or reimbursement

The statute and the Commissions
regulations recognize that a narrow view of coordination would open a large loophole in
the law.If, for example, a finding of
coordination required some sort of agreement between a candidate and a
spender, a candidate could set up a meeting with an organization known to be planning
campaign ads, and could discuss campaign strategy and the development of issues crucial to
the campaign.The organization could then
make independent expenditures based on this detailed knowledge and
information.The only apparent restriction
would be that a campaign could not agree on the final finished ad or actually
authorize a buy for the timing and placement of the ad.Obviously, such a limited approach would render the coordination standard
meaningless.

The district court opinion in Christian Coalition, however, effectively
ignored the Commission regulations on what constitutes coordination.Instead, the district court created its own
definition of coordination.This judicially
created definition of coordination bears little semblance to either the totally
independent approach of Buckley, the
language of the statute or the Commissions regulations.

In its lawsuit, the Commission
charged the Christian Coalition repeatedly spent its corporate treasury funds to influence
federal elections in violation of the FECA.Based
on the record evidence, the Commission alleged the Christian Coalitions leadership
and its staff repeatedly cooperated and consulted about campaign strategy and activities
with several different Republican candidates, their campaigns, and the National Republican
Senatorial Committee. The Commission alleged these coordinated expenditures constituted
in-kind corporate campaign contributions made in violation of 2 U.S.C. §441b.The Commission also detailed, based on the record,
numerous instances where it believed the Christian Coalition unambiguously advocated the
election or defeat of specific clearly identified candidates in violation of the
Acts prohibition on independent corporate campaign expenditures.

With respect to coordination, the
district court ruled against the Commission on five of the six coordinated expenditure
allegations and found that there was a contested issue of fact on the sixth.In the opinion of the district court, the Supreme
Court in Buckley did not address the First
Amendment concerns that arise with respect to expressive coordinated
expenditures.52 F.Supp.2d at 85. The
district court speculated: It can only be surmised that the Buckley majority purposely left this issue for
another case.In many respects this is that
case. Id.As a result the district court felt free to ignore the §441a(a)(7)(B)(i) standard
of coordination as well as the Commissions regulations.

Instead, the district court created
its own standard of coordination and applied it to a new concept, which it also developed,
known as expressive coordinated expenditures.The district court concluded that the First Amendment requires different
treatment for expressive, communicative or
speech-laden coordinated expenditures, which feature the speech of the
spender, from coordinated expenditures on non-communicative materials, such as hamburgers
or travel expenses for campaign staff.Id. at 85 n.45. The district court then defined an
expressive coordinated expenditure as an expenditure for a communication
made for the purpose of influencing a federal election in which the spender is responsible
for a substantial portion of the speech and for which the spenders choice of speech
has been arrived at after coordination with the campaign.Id. The
court then developed its own test for coordination:

In the absence of a request or
suggestion from the campaign, an expressive expenditure becomes coordinated[]
where the candidate or her agents can exercise control over, or where there has been
substantial discussion or negotiation between the campaign and the spender over, a
communications:(1) contents; (2)
timing; (3) location, mode, or intended audience (e.g., choice between newspaper or
radio advertisement); or (4)volume (e.g., number of copies of printed
materials or frequency of media spots).Substantial
discussion or negotiation is such that the candidate and spender emerge as partners or
joint venturers in the expressive expenditure, but the candidate and the spender need not
be equal partners.This standard limits
§441bs contribution prohibition on expressive coordinated expenditures to those in
which the candidate has taken a sufficient interest to demonstrate that the expenditure is
perceived as valuable for meeting the campaigns needs or wants.

Id. at 92.

Based upon
this analysis, and not the statute or the Commissions regulations, the district
court found that there was no improper coordination between the Christian Coalition and
Bush-Quayle 92, Helms for Senate, Inglis for Congress, Hayworth for Congress, or the
National Republican Senatorial Committee.

The district courts test for
coordination weakens important provisions of the Act. Let us suppose that Candidate Smith
is slightly behind in the polls, low on money, and needs help.It is the week before the election and he knows
that a corporation is planning to run an issue advertisement to assist the
Smith campaign.Smith contacts the president
of the corporation and complains that nobody has focused on an important matter in the
campaign: various problems in the personal life of his opponent, Congressman Jones.Because of this oversight, candidate Smith
believes that Congressman Jones is viewed in a better light by the electorate.Candidate Smith, however, does not want to run
such an advertisement himself for fear of being accused of negative advertising.

During his meeting with candidate
Smith, the wealthy supporter says, Thats a great idea!Thanks for the information.After the meeting, the wealthy supporter changes
the advertisement to say: Congressman Jones is a liar, tax cheat and a
wife-beaterkeep that in mind on Tuesday.The advertisement runs on the weekend before the election.Is this a coordinated expenditure?Would it make a difference if the wealthy
contributor said nothing during his meeting with the candidate?As we understand the district courts
opinion, there would no coordination between the candidate and the spender since there was
no substantial discussion or negotiation such that they appeared to be
partners or joint venturers. 52 F.Supp.2d at 92.This is particularly true if the spender said
nothing in response to the candidates entreaty.Under the Commissions regulations, however, it would appear that this
expenditure was a disguised contribution and coordinated because it was based on
information about the candidates plans, projects, or needs provided to the expending
person by the candidates agents, with a view toward having an expenditure
made.11 C.F.R. 109.1(b)(4)(i).This would appear to be the more appropriate
result given the ease with which coordination, and thus, the contribution
limits can be so easily evaded under the district courts test.

To its credit, the district court
recognized the difficulty of its task and virtually invited the Commission to file an
interlocutory appeal on the matter to the United States Court of Appeals for the District
of Columbia Circuit: This Court is of the opinion that this Order in relation to
Counts I, II, and III involves controlling questions of law as to which there is substantial ground for difference of opinion
and that an intermediate appeal from the order may materially advance the ultimate
termination of the litigation.52 F.Supp.2d at 98 (emphasis added). Commissioners
Sandstrom, Elliott, Mason and Wold, however, voted to end the Commissions
enforcement litigation against the Christian Coalition and not appeal the matter[6]

In my view, the Commission should not
adopt the ChristianCoalition definition of coordination.It is an approach which threatens the
restrictions and requirements of the statute.Moreover,
this judicially created definition completely ignores the definition of
coordination properly promulgated in the Commissions regulations. The
Commission devoted considerable resources to investigating this matter under the
regulations currently on the books only to now find that at least three Commissioners
favor an interpretation posited by a single district court judge.See, e.g.,
FEC v. Christian Coalition (Commissioners Elliott, Mason, Sandstrom and Wold
voted not to appeal district court decision); see
also MUR 4378 Statement of Reasons of Commissioners Wold, Elliott and Mason at 9.In my view, the Commission should have continued
to apply its current regulations and not the ChristianCoalition approach.By its failure to do so, the Commission has
created considerable uncertainty as to which standard of coordination should be applied in
the future.As the instant matters
demonstrate, this uncertainty will come at great expense in time, effort and energy to the
Commission and the regulated community.

II.

Rather than follow the definition of coordination created out of whole cloth by the
district court in ChristianCoalition, the Commission in these matters should
have followed the definition for coordination found in the Commissions regulations.Indeed, an administrative agencys obligation
to follow its own rules and regulations is one of the most basic tenets of administrative
law:

It
is elementary that an agency must adhere to its own rules and regulations.Ad hoc departures from those rules, even to
achieve laudable aims, cannot be sanctioned, Teleprompter
Cable Systems v. FCC, 543 F.2d 1379, 1387 (D.C.Cir. 1976), for therein lies the seeds
of destruction of the orderliness and predictability which are the hallmarks of lawful
administrative action.Simply stated, rules are rules, and fidelity to the
rules which have been properly promulgated, consistent with applicable statutory
requirements, is required of those to whom Congress has entrusted the regulatory missions
of modern life.

We do not believe [an agency] should
have theauthority to play fast and loose
with its own regulations.It has become
axiomatic that an agency is bound by its own regulations.The fact that a regulation as written does
not provide [an agency] a quick way to reach a desired result does not authorize it to
ignore the regulation or label it inappropriate.

Panhandle Eastern Pipe Line Co., v.
F.E.R.C., 613 F.2d 1120, 1135 (D.C.Cir.
1979)(emphasis added).See U.S. Lines v. Federal Maritime Commission, 584
F.2d 519, 526 n.20 (D.C. Cir. 1978)(it is well-settled that "an agency is not free to
ignore or violate its regulations while they
remain in effect")(emphasis added), citing
United Statesv.Nixon, 418 U.S. 683, 693-696 (1974),Service v.
Dulles, 354 U.S. 363 (1957), and Accardi v.
Shaughnessy, 347 U.S. 260 (1954); see also
Memorial, Inc. v. Harris, 655 F.2d 905 (9th Cir. 1980)("[I]t is by now axiomatic
that agencies must comply with their own regulations while they remain in effect.").

Pursuant to its statutory authority, see
2 U.S.C. § 437d(a)(8), the Commission put into place regulations defining what is
coordination.These regulations did not steal
upon an unsuspecting Commission.The
Commission approved these carefully crafted regulationsafter considering all the comments and testimony submitted in the rulemaking
process as well as the pertinent case law, including Buckley
v. Valeo, supra. These validly adopted regulations have the "force and effect of
law."Accardi v. Shaughnessy, supra; see also
United States v. Nixon, supra, 418 U.S. at 695 ("So long as this regulation is
extant it has the force of law.").

Obviously, it is possible for the Commission to amend or revoke the regulations
defining what is coordination.But it has
not done so.Indeed, last year the Commission
published a supplemental notice of proposed rulemaking defining the term coordinated
general public political communication.64
Fed. Reg. 68951 (Dec. 9, 1999).These
proposed rules are intended to incorporate into the Commissions rules the
standard articulated by the United States District Court for the District of Columbia in
the ChristianCoalition decision.Id.The Commission, however, still has not adopted
these regulations and it is possible that any final regulation will significantly differ
in some respects from the ChristianCoalition opinion.[7]

So long as the Commissions current regulations remain in effect and have the
force of law, the six members of the Commission are bound to respect and enforce them.This approach is far preferable to a decision
which ignores regulations on the books and, instead, seeks to apply standards which have
not been promulgated and are only at the proposed rulemaking stage.In my view, failure to apply the current
regulations may well expose the Commission to a §437g(a)(8) action alleging that the
Commissions dismissal of this matter was contrary to law.

III.

It is unclear whether the Commission
would have ultimately proceeded against respondents under the definition of coordination
currently found in the Commissions regulations.On the one hand, the Office of General Counsel asserts in its close-out General
Counsels Report:

The investigation has produced enough
evidence tending to demonstrate that through the
AFL-CIOs status as a national partner of the Coordinated Campaign, both
the individual state AFL-CIO federations and AFL-CIO headquarters itself had access to
volumes of non-public information about the plans, projects, activities, and needs of the
DNC, the DCCC, the state Democratic parties, and in some instances individual candidates
for Federal office.Moreover, the evidence
shows that the AFL-CIO had not merely access to, but authority to approve or disapprove,
the DNCs and the state Democratic committees plans for Coordinated
Campaign activity.

Under the interpretation of the law
put forward by the Commission in the ChristianCoalition case and cases prior to it, the sharing
of this much information about the potential recipient committees plans, projects,
activities and needs would have been more than sufficient to taint the independence of any
subsequent election-related communications to the general public by the AFL-CIO.

Id.

On the other hand, it is procedurally
premature to suggest that the Commission, or even the General Counsel, would have settled
on and eventually approved this analysis.For
example, the General Counsel had not yet prepared or sent his General Counsels Brief
setting forth his position on the factual and legal issues of the case and
containing a recommendation on whether or not the Commission should find probable cause to
believe that a violation has occurred.11
C.F.R. §111.16(a).Nor had the respondents
filed a brief setting forth respondent[s] position on the factual and legal
issues of the case.11 C.F.R.
§111.16(c).Nor had the General Counsel,
after reviewing the respondents brief, advised the Commission on whether he
intended to proceed with the recommendation or to withdraw the recommendation from
Commission consideration.11 C.F.R.
§111.16(d).

Adding to the uncertainty is the fact
that the June 9, 2000 General Counsels Report quoted above contains virtually no
discussion of the current regulatory definition of coordination and its
application to the particular facts of the instant matter; instead, the Report focuses
almost entirely on its conclusion that if the Christian Coalition standard governs
these matters, further investigation of any strand of the investigation is unlikely to
produce evidence of significant violations by the AFL-CIO or the committees with which it
was in contact.June 9 General Counsel Report
at 49.[8]

Even if violations were found in
these matters, it is unclear what remedies would have been applied.I, for one, would have been happy to settle the
case with a minimal civil penalty in order to establish that the Commissions current
regulations and not the ChristianCoalition case define the term
coordination.

While the substantive resolution of
these matters under the Commissions current regulations is uncertain, it is clear to
me that those regulations should have been applied.The
ChristianCoalition
definition of coordination is so narrow and limited that it threatens any
effort to enforce the requirements of the Act in a serious manner.Moreover, as a matter of administrative law, I
fail to see how the Commission can simply turn its back on its current regulations and
instead apply a standard which is still the subject of debate in a notice of proposed
rulemaking. For these reasons, I believe the Commission should have resolved these matters
under its current regulations.

As a practical matter, however, I can
no longer see four votes on the Commission for enforcing those regulations.As such, it obviously would be unfair to apply the
broader definition of coordination found in the current regulations against the
respondents in the instant matters, but later apply the narrower and more lenient ChristianCoalition
standard to others.Moreover, a vote against
the General Counsels recommendation to close these matters would needlessly have
kept these matters open where only four Commissioners were participating.As a result, I voted to adopt the General
Counsels recommendation to take no further action and to close the file in these
matters.

[3]
H.R. Conf. Rep. 94-1057 at 38 (1976).Specifically,
the Conference Report states: The definition of the term independent
expenditure in the conference substitute is intended to be consistent with the
discussion of independent political expenditures which was included in Buckley v. Valeo.Id.

[6]Clearly, the Commission should not have dropped a
significant enforcement action such as the Christian
Coalition case and wrested resolution of these important issues away from the Article
III courts. The decision of a single district court certainly cannotresolve these important issues. Indeed, the decision of the
district court in ChristianCoalition is not binding precedent on any other
federal court, even in the same district.See, e.g., In re Korean Air Line Disaster, 829 F.2d
1171, 1176 (D.C.Cir. 1987)(Binding precedent for all [circuits] is set only by the
Supreme Court, and for the district courts within a circuit, only by the court of appeals
for that circuit), affd, 490 U.S.
122 (1989).

[7]
Moreover, there is little doubt that whatever regulatory standard the Commission develops,
it will be subject to some future challenge and litigation.Indeed, one member of the regulated community reviewed the supplemental notice of
proposed rulemaking creating a regulatory definition of coordination based on Christian Coalition and predicted. . .that
there would be negative comments on the new Commission proposal from business, labor and
other groups.BNA, Money & Politics
at 2 (December 3, 1999).This prediction has
proven to be accurate.Negative comments have
been made regarding the supplemental notice of proposed rulemaking, and the Commission is
currently struggling to address them.

[8]
There is a legitimate question regarding application of the coordination standards in the
statute and regulations to support of a party,
versus support of a particular candidate.The coordination rules deal with, e.g., requests
or suggestions from a candidate, his authorized political committees, or their
agents.2 U.S.C.
§441a(a)(7)(B)(i);see also 11 C.F.R. §109.1(b)(4).Thus, before I could be persuaded to find probable
cause to believe a violation occurred regarding in-kind support of the DNC or some state
Democratic parties, I would need some analysis showing how the candidate-oriented
coordination rules could be applied to such party-oriented activity.